Clouds over China’s Solar Power Industry

The recent turmoil in China’s stock market has sent shock waves through the country’s corporate sector, including its mighty solar power industry which in recent years has grown to dominate the world market.

Harnessing solar energy is considered a key way of cutting back on fossil fuel use and of meeting the challenge posed by climate change.

Seven out of the world’s top ten manufacturers of solar panels are China-based companies, together providing about 40% of global solar supplies.

But now the industry’s future expansion is under threat as companies try to cope with too much production capacity, very low profit margins and crushing amounts of debt.
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Ailing industry
Varun Sivaram is a researcher at the US Council on Foreign Relations, specialising in renewable energy.  He says that while China’s dominance of the solar market has led to low global prices, the industry is not in a healthy state.

“Solar is heading down a path of profitless prosperity”, says Sivaram.  In effect, he says, China is subsidizing the global solar industry.

Sivaram says one of the damaging side effects of China’s dominance of the solar market is that production has tended to stick to old technologies and innovation in the industry has been stifled.

“As panel manufacturers scrape by on razor-thin margins, kept afloat by government credit, investing in fundamentally new technologies is far from a priority.  ”The recent turmoil in China’s stock market has sent shockwaves through the country’s corporate sector, including its mighty solar power industry which in recent years has grown to dominate the world market.

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